5 minute tax updates: November 11-15

Car parking fringe benefits ruling to be updated
New draft determination on CGT cost base and assumed liability
Tax debts and deceased estate treatments to be reviewed by Inspector-General
ATO extends assistance to drought affected regions
Will using more contractors mean future TPAR requirement?
Client a trustee of closely held trust? Which rules apply?
Employers can cop penalties and charges if they misclassify workers
E-invoicing a step closer
The discretion to disregard or reallocate remedial SG contributions
WA payroll tax threshold to increase (twice)

Car parking fringe benefits ruling to be updated
A new draft taxation ruling has just been made available (TR 2019/D5, download a copy here) which sets out to update TR 96/26 (withdrawn) to reflect contemporary commercial car parking arrangements and legal developments, including the Federal Court decisions in Commissioner of Taxation v Qantas Airways Ltd [2014] FCAFC 168 and Virgin Blue Airlines Pty Ltd v Commissioner of Taxation [2010] FCAFC 137. Paragraph 81 of TR 96/26 expressed the view that car parking facilities that have a primary purpose other than providing all-day parking, (that usually charges penalty rates significantly higher than the rates chargeable for all-day parking at commercial all-day parking facilities) were not commercial parking stations. This view will no longer apply in recognition of the Qantas decisions. The new draft ruling outlines the Commissioner’s current view that if a car park allows all-day parking but higher fees discourages this, the car park can still be considered a commercial parking station if it satisfies other requirements. When this ruling is finalised, the intention is to apply this view to car benefits provided from 1 April 2020.

New draft determination on CGT cost base and assumed liability
The draft determination TD 2019/D11 confirms the ATO view that an asset’s cost base for CGT purposes does not include a liability assumed in acquiring the asset in certain circumstances. Note that the TD does not consider the scope of section 112-35 (assumption of liability rule) itself. It is considered that there will be limited circumstances in which a deduction is available for discharge of a liability to which section 112-35 applies.

Tax debts and deceased estate treatments to be reviewed by Inspector-General
The Inspector-General of Taxation and Taxation Ombudsman, Karen Payne, has announced the launch of two new investigations into aspects of the ATO’s systems and procedures. The investigations will examine and explore two key matters:

  1. Rise in collectable debt levels – IGTO will examine the underlying causes for the rise in uncollected, undisputed tax debts
  2. Tax administration of deceased estates – IGTO will review the ATO’s approaches to dealing with deceased estate tax matters.

The reviews have arisen in response to both market feedback and the ATO’s own annual report which shows a debt book of almost $45 billion, with collectable debt accounting for more than half of that amount ($26.5 billion).

ATO extends assistance to drought affected regions
The ATO reminds practitioners that if their clients are struggling in drought-affected communities to contact the ATO if they need assistance. There is also a drought and tax hotline, 1800 806 218.

Will using more contractors mean future TPAR requirement?
The ATO says that at this time of year, your business clients that provide mixed services may make greater use of cleaning and courier contractors, especially:

  • building maintenance, property management and event management businesses engaging contractors to provide cleaning services
  • florists and other retail businesses engaging contractors to provide courier services.

Keeping the right records will help lodgement obligations that may come due in August 2020.

Client a trustee of closely held trust? Which rules apply?
Two special sets of rules apply to closely held trusts – the trustee beneficiary (TB) reporting rules and the tax file number (TFN) withholding rules. However the circumstances when they apply are different. The ATO has provided information that will help you quickly work out:

  • whether the trust is one to which either or both sets of rules applies (Part A)
  • which beneficiaries the rules apply to (if they apply to the trust) (Part B).

Employers can cop penalties and charges if they misclassify workers
Getting it wrong compromises your clients’ ability to meet their tax and super obligations, and can mean their workers miss out on employee entitlements. If your clients misclassify their workers they can also be caught out with penalties and charges. You can help your clients decide if their contractors are actually employees.

E-invoicing a step closer
E-invoicing is the exchange of invoices directly between the supplier’s and buyer’s systems. E-invoices can be sent directly between systems, even if the buyer and supplier are using different software, as long as both are “Peppol” e-invoicing enabled (Pan-European Public Procurement On-Line). With the ATO now established as the Australian Peppol authority, the onward march to full e-invoicing continues.

The discretion to disregard or reallocate remedial SG contributions
In light of the SG amnesty now getting the go-ahead from the Senate Economics Legislation Committee, practitioners may need to bone up on the Commissioner’s discretionary powers regarding remedial super guarantee contributions. Although the SG amnesty bill (as it stands) limits the Commissioner’s ability to remit penalties, there is still the possibility of amendments to the legislation before it becomes law. Also, with regard to keeping under contribution caps (these SG remedial contributions may cause employees to exceed their concessional contributions cap), an employee may apply for a determination to have these remedial SG contributions disregarded or allocated to another year and not count towards their concessional contributions cap in the year they are made. The ATO has provided a fact sheet.

WA payroll tax threshold to increase (twice)
Western Australian Premier Mark McGowan has announced that the payroll tax exemption threshold in Western Australia will be increased to $950,000 from 1 January 2020, and again to $1 million from 1 January 2021. Currently, WA businesses with Australia-wide payrolls of up to $850,000 are exempt from payroll tax.

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